'A no-brainer': small businesses can be part of a renewables revolution too
Small and medium-sized enterprises looking to source renewable electricity now have several options so they’re not left behind as larger corporates make the shift.
Major corporations are increasingly adopting renewable electricity, but what about those who make up 99% of businesses in the EU - small and medium-sized enterprises (SMEs)? Until recently, many SMEs were deterred from going down the renewable energy route by a combination of cost and complexity, or simply did not see it as a priority in the daily struggle to stay afloat.
As Allen Creedy, policy chair for energy at the UK’s Federation of Small Businesses, puts it: “While most of our members are interested in contributing to the shift to a low-carbon economy, they have been put off switching energy suppliers because it can be very time-consuming to do so – time that they could otherwise spend running their business.” Many prefer to focus on energy efficiency as a priority, rather than green electricity, he adds.
Efficiency is seen, rightly, as low-hanging fruit. No fewer than 93% of European SMEs are taking at least one action to be more resource efficient – mostly around saving energy - according to an extensive survey from the European Commission. And another survey, conducted last year by Budapest-based Geonardo, reveals that the main motivation is financial, followed by the fight against climate change and securing an improved company image.
But when it comes to moving beyond energy efficiency to active investment in renewables, other factors come into play – such as customer pressure. As growing numbers of large corporates shift to green electricity, so they expect their supply chain to follow suit. For SMEs in such a chain, that can be a powerful motivator. Laura Timlin, director, business services, at the Carbon Trust, points out: “It can help protect an existing relationship, or sometimes win new business from a company with strong green credentials.”
With cash-strapped small businesses, of course, cost can still be a major barrier. But with the price of both solar and wind power plummeting – the former down by 80% since 2008 – it’s a barrier which is fast collapsing. According to Timlin, payback times for on-site solar in the UK have fallen to around seven years now – even after subsidies were slashed. It’s been enough to tip the balance for some small businesses, says Creedy, with the prospect of generating their own electricity, especially from solar, being more appealing than buying a renewable offer from a utility provider.
For those businesses which still balk at the upfront cost, there’s the option of leasing the technology instead. This is becoming increasingly popular for solar in the Netherlands, says Marc Borghans, head of ING’s sustainable project finance team. “As prices fall, companies can strike deals where they are paying less for their power than they were before.” And there’s another advantage of sticking solar on the roof: “You get rid of some of the uncertainty over future fuel prices, because there’s no fluctuation in the cost of sunlight. It’s free now, and it’ll be free in the future.”
Such installations – whether leased or owned – will become even more viable, Borghans predicts, as companies shift to fleets of electric vehicles, whose on-board batteries can double as electricity storage units, so helping balance out supply and demand.
One such company is German bakery Ihr Bäcker Schüren. Even after baking more than 10,000 rolls a day, there’s still excess energy from the photovoltaic set-up on the roof to power a fleet of electric vans. While owner Roland Schüren notes that his energy concept, which also incorporates biomass boilers and a highly efficient cooling system, is “quite unusual” for the sector, he’s happy to open his doors to other bakers to share his energy know-how. It’s not cheap, but as Schüren notes, “we have to invest to grow bigger”, and the system should pay for itself within five to eight years.
Meanwhile, falling prices have helped unleash a wave of start-ups offering renewable tariffs – whereby businesses buy certified green energy “down the wire”, rather than installing it onsite – which are pitched at broadly the same price as their conventional equivalents. Among these are offerings by Haven Power – initially to businesses in Suffolk, where it’s headquartered – and London-based start-up Squeaky Energy, which is also aiming directly at the SME sector. In the Netherlands, the Sustainable Energy Union ('De Duurzame Energie Unie') brings together a number of local renewable energy producers, some of them co-operatives, to help them overcome the various hurdles to selling energy direct to consumers.
Of course, “renewable tariff” doesn’t literally mean all the electrons flowing into your power sockets are generated by a renewable source: in Britain and most other countries, the national grid is a single network, balancing supply from numerous generators – green and brown – with demand. It is mandatory for EU member states to have Guarantees of Origin schemes (GoO) – and the UK’s version is Rego (renewable energy guarantees of origin), assuring customers that enough green power is being produced to match their consumption. And those seeking added assurance might be drawn to Smartest Energy, the first provider to be independently certified as 100%- renewable by the Carbon Trust.
With such assurances in place, and prices appoaching parity, switching to a green supplier “is a no-brainer”, says Brian Collins, director of Suffolk-based road repair machinery manufacturer Proteus Equipment Ltd. It signed up to Haven in a process that Collins insists was “no hassle at all”.
“No brainer” is also the phrase used by David Hodgson of premium jam maker Somerset Cuisine, speaking of his decision to switch to Squeaky Energy last year. “They came up with an offering that was pretty much [as cheap] as ‘brown’ energy, so only an idiot would walk away from a proposal like that!”
Small business is widely, perhaps unfairly, seen as inherently conservative. But with costs continuing to shrink, we should see increasing numbers of SMEs begin to embrace the transition.
Photo: A man controls the solar panels covering the roof of his building. Photograph: Michaela Rehle/Reuters
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